Spot Gold extended gains to a fresh all-time high of $3,977.19/oz. on Tuesday, supported by expectations of more Federal Reserve interest rate cuts and in the absence of any signs of a reprieve from an impasse between the two houses of the US Congress that has caused a government shutdown.
Markets are now pricing in about a 92.5% chance of a 25 basis point Fed rate cut in October and an 81.5% chance of another 25 bps cut in December.
Last week, Fed Governor Stephen Miran once again expressed support for an aggressive rate cut trajectory because of the impact of the Trump administration’s economic policies.
On the other hand, Kansas City Federal Reserve Bank President Jeff Schmid indicated he was disinclined to further rate cuts, stating the central bank should remain focused on the danger of too-high inflation.
“The chances of October and December cuts are still skewing above the 80% mark, so that’s actually supporting gold prices and also this government shutdown as well, given there is still no resolution between the two sides of the U.S. Congress,” OANDA senior market analyst Kelvin Wong was quoted as saying by Reuters.
Spot Gold was last down 0.11% on the day to trade at $3,956.29 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Year-to-date, the yellow metal has surged 50.76%.
Yesterday Goldman Sachs revised up its December 2026 Gold price forecast to $4,900/oz. from $4,300/oz., as it highlighted robust Western exchange-traded fund inflows and central bank purchases.
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